June Market & Arrival News
What’s Happening in the Market:
The month of May opened with the market trading at the July (KCN23) position of 185.7. Increased volatility in price followed from the 15th through the 30th of the month, while domestic economic uncertainty gripped the U.S. as debt ceiling talks heated up in Washington. Rumors of a brokered deal on the debt ceiling came out on May 30th and the coffee market dipped down to 176, the lowest price seen for the month. Prices picked back up at the beginning of June, with the market seeing a 9-cent spike on June 8, followed by two days of retracing back down to 185.7.
The Robusta market has been of significant discussion during the month of May. Tight supplies and concerns of shortages have pushed Robusta prices up to record highs, shrinking the gap in prices between Robusta and Arabica qualities. Much of this has been due to an increase in Robusta demand, as many roasters integrate Robusta into blends for cost-saving measures. It has also been influenced by coffee being on a negative biennial production cycle. Coffee production tends to cycle with a high production year followed by a lower production year. Supply is always a concern and influencing factor during the negative biennial years. An additional bullish factor for the Arabica market is the confirmed forecast of El Niño conditions. El Niño years typically bring heavy rains to Brazil and drought to regions of India, both of which can affect the quality and quantity of harvest.
Despite the forecasted concerns about El Niño weather patterns, the weather in Brazil has been dry and optimal for harvest. Harvest in Brazil, for both Arabica and Conilons, is in full swing. Around the world, central America has completed harvest and is now finishing the shipment of higher-grown specialty coffees. Exports out of Honduras were up 79% for May, y/y. Meanwhile, exports out of Ethiopia are down 23% for the period July-April. Ethiopia continues to struggle with a shortage of shipping containers. Inflation within the country is at 38%, fueled by a shortage of foreign currency which has led to extremely high prices for basic goods.
The coffee market continues to trade in the July period, KCN23, with the first notice day (FND) being June 20, 2023.
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Questions? Connect with our expert Sales Team!
Jolene Zehnder / Director of Sales - jzehnder@merconspecialty.com
Michelle Dunaway / Senior Sales Executive - mdunaway@merconspecialty.com
Emily Smith / Sales Executive - esmith@merconspecialty.com
Camila Topke / Sales Executive - ctopke@merconspecialty.com
Serena Beze / Sales Executive - sbeze@merconspecialty.com
Crystina McKenna / New Business Development - cmckenna@merconspecialty.com